It is not something unusual that an employee who has worked the whole month receives a lower monthly wage than his colleague who has taken leave even though they are both guaranteed the same monthly wage according to the wage assessment. So how is that possible?

First, let us recapitulate how reimbursement for leave or obstructions at work is calculated.

How to calculate the average wage is strictly stated in part 16, chapter XVIII, §351 and following of the Labour Code. The average wage is determined as a gross average hourly wage from the reached gross wage or salary and hours worked in the determining period, which is the previous calendar quarter; if an employee doesn’t work at least 21 days in the determining period, we work with the expected wage or salary.

For these purposes, all bonuses are counted into the reached sum of the wage or salary, that means extra bonuses, target bonuses, bonuses for solving a one-time task etc.

Only bonuses given for a longer period of time than a quarter are put into the calculation as a proportion of the bonus for the given quarter. The rest of the bonus is evenly distributed into the following time periods.

Thus, it is obvious that every extra bonus or one-time bonus leads to a higher average wage for the whole following quarter.

Employers often have to explain to surprised employees that reimbursement for leave is calculated based on the average wage from the last quarter and that this process is in accordance with the Labour Code. But what if the employee argues and requires fair treatment quoting §110 of Labour Code: “For the same work or for work of the same value, every employee is entitled to the same wage, salary, or bonus based on prior agreement”.

This argument is difficult to disprove. Unfortunately, reimbursement based on average wage leads to unfairness in remuneration.

Examples:

Employees X and Y have the same monthly wage of 30 000 CZK according to the wage assessment. During the first quarter of 2017 both of them worked all planned hours. The average hourly wage for both of them for this time period is 173,07 CZK. In June, employee X goes on holiday for 10 days and takes leave for this time period. Because of the calculation based on the average wage, his or her wage is 210 CZK more than the wage of his colleague who didn’t take any leave.

Employee with a fixed monthly wage of 40 000 CZK worked all planned hours in the first quarter of 2017. In February, he or she got an extra bonus for excellent performance of 10 000 CZK. In June, he or she had to visit a doctor, this obstruction at work lasted for 3 hours. Because of the calculation based on the average hourly wage, the gross wage for the month of June will be 68 CZK more than if he or she hadn’t left work at all. This difference is not that big but it is not difficult to imagine situations in which it could be a lot bigger.

These examples make it clear that with employees who have been absent, one must count with larger expenses for wages than for other employees who have worked the whole month without having taken any leave or having any obstructions at work (visiting a doctor, accompanying a family member to a doctor etc.). However, the situation can be reversed as well. Employees are often surprised when they see that their salary for the month during which they took leave is lower than the monthly wage guaranteed by the employer. If an employee is intelligent enough, he or she finds out very soon which months are the most advantageous for them as far as taking leave is concerned.

Even more surprised are usually foreign managers who approve the wages. Payroll accountants have to repeatedly explain that the wage has been calculated correctly and that according to our laws, the fixed wage is actually not fixed at all and that wage expenses cannot be precisely estimated on the basis of the wage assessment alone.

Using the average wage to calculate leave or obstructions at work is often discriminating employees who work all of the hours and for these hours get salaries or wages that are lower than those of their colleagues who had been absent. An employee can experience discrimination also in a case where wage is increased from July 1^st onwards, for example, and he or she takes leave after that. It is the average wage of the previous quarter that is used for the calculation of reimbursement for leave and thus the employee is payed a lower wage than the agreed increased wage.

Experts on labour law are pointing out that this process of reimbursement for leave calculation can lead to a breaking of the law and not comply with the right of employees to a fair remuneration (article 28 of the Charter of Fundamental Rights and Freedoms). The Constitutional Court has not yet dealt with a complaint of this kind but it is very likely that if someone did complain in this case, it would be very easy for them to win the dispute (for example according to the opinion of JUDr. Bohuslav Kahle). This legal provision on the usage of average wage probably goes against one of the fundamental rules of employment relationships and that is the right to a fair remuneration.

According to the available data, the amount of payed reimbursement calculated based on the average wage makes up approximately 17 % of the total sum of yearly wages. Therefore, it is not just a marginal matter.

It would not be reaching too far to think that inconsistencies and unfair treatments like in this case would make our citizens not believe in our laws, their fairness, and equality before the law. This practice also increases wage expenses, complicates accounting programs, and prolongs the time period needed for payroll processing. And everything could be solved so much more easily, just like it is west from our country, for example. Will we also see a change soon? Unfortunately, the amendment currently in discussion does not include any motion of this kind whatsoever once again.

Written by: Jana Schlöglová